Retailers need bodily items bought on on-line platforms be slapped with the 12% worth added tax.
MANILA, Philippines — An affiliation of shops is urging the federal government to impose value-added tax (VAT) on bodily items bought on e-commerce platforms like Lazada, Tiktok and Shopee to stage the enjoying subject with brick-and-mortar shops.
Philippine Retailers Affiliation (PRA) president Roberto Claudio informed the Inquirer on Friday, March 14, that a good portion of digital gross sales consisted of transactions involving bodily items. But he lamented that many of those remained untaxed, placing brick-and-mortar retailers “at an obstacle.”
“Nearly all of e-commerce gross sales transactions contain bodily items by means of platforms like Shopee, Lazada and TikTok,” Claudio stated, emphasizing that the present tax construction was creating an “uneven” enjoying subject.
He stated that whereas brick-and-mortar retailers had been complying with VAT and different tax obligations, many on-line sellers, notably these working cross-border, had been capable of bypass these levies.
Beneath the Bureau of Inner Income (BIR) Income Regulation No. 003-2025 issued on Jan. 16, the sale, provide and supply of bodily items from overseas territories are excluded from VAT on digital companies.
READ: Marcos indicators regulation imposing 12% VAT on digital companies from offshore corporations
Claudio argued that the present tax regime was additionally leading to “vital” income losses for the federal government. With the fast progress of the digital financial system, he harassed the significance of revising tax insurance policies to make sure truthful competitors whereas boosting authorities revenues.
Claudio cited a 2024 report from Google Philippines and Bain & Firm, which estimated the nation’s digital financial system reaching a gross merchandise worth of $31 billion.
He identified that with such a considerable market, taxation insurance policies should evolve to seize misplaced revenues from on-line gross sales transactions.
READ: Client rights teams reject new VAT regulation on digital companies, items
‘De minimis’ rule
The PRA official additionally prompt revisiting the nation’s de minimis rule, which at present exempts imported items valued at P10,000 or beneath from duties and taxes.
He argued that this coverage, whereas meant to ease commerce and logistics, has inadvertently allowed overseas e-commerce gamers to promote merchandise tax-free, whereas native companies stay topic to VAT and different regulatory charges.
“There’s a have to reassess whether or not the de minimis threshold continues to be acceptable given the altering retail panorama,” Claudio stated.
Past taxation issues, Claudio highlighted the resilience of the Philippine retail sector regardless of financial challenges.
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He expects the native retail trade to develop between 5 % and 10 % this yr, reaching an estimated P5 trillion in gross worth. This progress, he stated, could be pushed by shopper spending restoration, growth of procuring malls and the rise of omnichannel retail technique that integrates bodily shops with e-commerce platforms.
